To address the difficulties encountered by fusion software in retrospectively co-registering anatomical and functional images for regions of the body other than the brain, we have recently taken a more hardware-oriented approach by directly fusing the technologies of CT and PET. This combined PET/CT prototype has demonstrated in over 250 cancer patient studies the important advantages of routinely performing co-registered anatomical and functional imaging. The studies with the prototype have stimulated commercial development of combined PET/CT scanners and at least two designs that comprise a clinical CT scanner placed in tandem with a clinical PET scanner are now available. While currently available PET technology has demonstrated broad applicability in diagnostic cancer imaging, limitations in spatial and temporal resolution have restricted its utility in cancer research. These limitations have also affected the sensitivity of clinical applications of PET. To date, the major success of PET in oncology has been its ability to identify tumors with relatively high levels of [18F]fluoro-deoxyglucose (18FDG) uptake compared to normal tissues. However, an increasing number of specific PET applications are emerging that require imaging capabilities beyond the current technology. There is a growing demand from both the research and clinical arena to improve PET scanner sensitivity and to identify and accurately localize lower levels of abnormal tracer uptake in increasingly smaller structures. Therefore, we are proposing to address these demands by designing and building a high performance PET scanner with integrated CT technology using the new scintillator lutetium oxy-orthosilicate (LSO). The PET detectors are based on a novel large area panel design that will extend axial coverage and achieve count rate performance significantly exceeding that of current PET scanners. Four detector panels arranged in a hexagonal configuration will allow space for a closer integration of the CT components than has previously been possible with both the initial prototype and the commercial designs. A novel feature of this device is that the CT components will also use LSO as the detector material and cover a larger axial and transaxial field-of-view than current CT scanners. Thus, by achieving a closer integration of PET and CT, an extended axial field-of-view and significantly improved imaging performance, this novel combined PET/CT scanner will open up new areas for the imaging and treatment of cancer.